Prescribed Investor Rate (PIR)
(These examples were based on rates as at Feb 2022 and may change, please use this is as guide only)
Commonly referred to as PIR your Prescribed Investor Rate is the tax rate you elect when investing into certain types of managed funds. These managed funds are known as portfolio investment entity (PIE) or PIE’s and the income generated from these funds is known as PIE Income. This tax should not be confused with Resident Withholding Tax.
KiwiSaver schemes are PIE’s and therefore you need to provide to your scheme provider your IRD number and your correct PIR rate. If you do not provide this rate the highest default rate will be applied, currently 28% and unlike some other taxes this is a final tax meaning you may not be entitled to a refund on any overpaid taxes. Likewise, if you elect, or stay on a rate lower than you should be, there may be complications with underpaid tax in future years
The IRD will communicate with your KiwiSaver provider who will change this automatically if your PIR is incorrect. However, it is still your responsibility to ensure that you are using the correct rate.
Tax is complicated and changes often in line with Government policy. If you have any doubt about your own tax position please consult a tax specialist such as an accountant or visit the public IRD web site- there are plenty of examples in this site.
The information below is a general guide only.
Focusing on KiwiSaver, individuals have a choice of 3 PIR rates, 10.5%, 17.5% or 28%.
10.5% - to be on this rate your taxable income must be under $14,000- you may however earn PIE income on top of this figure up to a combined $48,000 in either of the previous 2 years*.
17.5% - to be on this rate your taxable income should be between $14,001 to $48,000- you may however earn PIE income on top of this figure up to a combined $70,000 in either of the previous 2 years*.
28% - If you’re taxable income was more than $48,000 in both of the previous two income years.
*Previous two income years relates to the two years prior to the tax year that the PIR is being applied to. (As an example, use your income for the 2013 and 2014 tax years to work out your 2014/2015 PIR.)
If you are not a New Zealand resident your rate must be 28%.